tag:blogger.com,1999:blog-5235419263414453422.post6184890428005171990..comments2024-02-23T01:30:06.101-08:00Comments on Early Warning: Automation or Offshoring? Evidence from General MotorsStuart Stanifordhttp://www.blogger.com/profile/07182839827506265860noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5235419263414453422.post-49865789876483729992011-07-26T20:32:37.095-07:002011-07-26T20:32:37.095-07:00And I meant to add that, as a consequence of GM...And I meant to add that, as a consequence of GM's 2010 withdrawal from the NUMMI joint venture, Toyota will be opening a new plant in Mississippi this fall to make the Corolla, which used to be made alongside the Matrix/Vibe. This new plant will have 2,000 employees and will make 150,000 Corollas a year for the North American market. That's 75 units per employee per year. At the other end of the scale, Fiat operates a much reviled plant in Italy where the corresponding figure last year was 6. That difference is not all about automation, it's mostly about trade union contracts.porsenahttps://www.blogger.com/profile/04362269873149438270noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-37195773642682334382011-07-26T20:23:46.387-07:002011-07-26T20:23:46.387-07:00Stuart, I made a long reply with links about this ...Stuart, I made a long reply with links about this but Blogger wiped it out. Basic points:<br />Auto manufacturing has changed enormously since 1955. Aside from body stampings, some engines and maybe some parts of the drive train, the GM of 2009 was basically a systems integrator. Design, engineering and production of the vast majority of parts was contracted out.<br /><br />The auto industry has been driven to a least-cost model that encourages offshoring. <br /><br />GM's management made a decision in the early 200's to focus US production on trucks and SUVs, because that's where the money was. By the time the 2008 crunch rolled around, nothing smaller than a Malibu was assembled by GM in an American GM plant. The Pontiac Vibe, basically a rebadged Toyota Matrix, was made alongside the Matrix at the NUMMI joint venture plant in California. GM market share but not GM jobs. Likewise, the Aveo was imported from Korea. <br /><br />I don't think your offhand dismissal of foreign manufacturers is well founded. For the third year in a row this year, the US-made vehicle with the largest content of American jobs per unit is the Toyota Camry. Honda uses over 600 North American parts suppliers for its vehicles assembled in the US and Canada. <br /><br />As Lars-Eric said just above, the auto manufacturing industry has changed enormously since 1955. Then, GM made in-house most of the parts in its cars and trucks. In 2009, the industry had moved to a least-cost model, with the design, engineering and production of most of its vehicles outsourced to who-knows-where. Some of these contractors are American, others aren't.porsenahttps://www.blogger.com/profile/04362269873149438270noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-21861699099657425312011-07-26T15:19:21.543-07:002011-07-26T15:19:21.543-07:00Stuart,
You have made an interesting try to look ...Stuart,<br /><br />You have made an interesting try to look at the effects of automation by looking at the number of employees in GM and the number of cars produced at two different times 1955 and 2009. However the comparison is difficult. When looking at automation we often think about the assembly line, which is a small part of the cost of the car. Today it takes about 10 to 20 man-hours to assembly a car. The manufacturing the last 60 years has changed, today a much bigger portion of the parts are purchased from sub suppliers and a lot of the services are outsourced. The cars also contain a lot more equipment and technology. Car manufacturing today I guess is mainly research and development, design, purchasing, logistics and marketing and not so much manufacturing.Lars-Eric Bjerkehttps://www.blogger.com/profile/12632949799117185675noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-9645867264045683702011-07-26T14:41:53.858-07:002011-07-26T14:41:53.858-07:00Mr. Burnstein is implicitly relying on what he lea...Mr. Burnstein is implicitly relying on what he learned from economists - that the more-highly-paid controllers of the robots will demand new products and services, and that new and existing industries supplying the new products and services will take on all of the 'released' workers, and more. So "more jobs" are created indirectly, elsewhere.<br /><br />However, factory-floor wages in the auto industry (for example) are trending down despite the demand for greater skill, so supply cannot create its own demand. <br /><br />Also, it's unlikely that an auto assembler can straight away get work as a nurse, yoga instructor or personal coach, so any adjustment will require several other people to change jobs as well. The new jobs could take decades to appear.<br /><br />A weaker argument, that using robots stops firms going out of business altogether and so saves more jobs than not using robots, is valid but not very inspiring.Greghttps://www.blogger.com/profile/11939046017258198038noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-7924818391236807572011-07-26T13:15:19.458-07:002011-07-26T13:15:19.458-07:00I think the 'higher productivity is always goo...I think the 'higher productivity is always good' argument depends on a transfer of labor into other sectors that remain more labor intensive (if only in relative terms). <br /><br />It isn't that auto-making robots would generate more demand for auto-making workers. Rather, the cheaper cars would save consumers a lot of money which they would instead spend on other products, increasing demand in sectors which would hire the displaced auto-workers. <br /><br />It obviously works some of the time. But the market ideology requires us all to believe that it ALWAYS works. (And bite your tongue rather than speak of other possible outcomes ...)Sethhttps://www.blogger.com/profile/16486234948199900568noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-789929909892828262011-07-26T12:15:53.781-07:002011-07-26T12:15:53.781-07:00Unknown - it's true that quite a lot of Japane...Unknown - it's true that quite a lot of Japanese cars are assembled in the US, but my impression is that a lot of the parts and the majority of the value added are still coming from Japan.Stuart Stanifordhttps://www.blogger.com/profile/07182839827506265860noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-410000591940146642011-07-26T12:10:44.804-07:002011-07-26T12:10:44.804-07:00"Of the two factors, both are roughly equal i..."Of the two factors, both are roughly equal in importance, but productivity improvements (automation) appear to be slightly more important than loss of market share (offshoring) -- though I wouldn't place too much stress on that difference given the uncertainties of this rough calculation."<br /><br />Loss of market share does not imply offshoring. Most Japanese cars sold in the US nowadays are made *in* the US. Same is increasingly true of Korean makes. The only way to do this calculation would be to look at the total number of US auto workers over two or more years, and compare it to the number of US-made cars over the same years. Imports are irrelevant because autos made in another nation say absolutely nothing about productivity and automation within US borders.Anonymousnoreply@blogger.com